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Exercise 4 (Evaluating Special Order) Glamour Jewelers is considering a special order for 10 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is P3,899.50 and its unit product cost is P2,640.00 as shown below: Materials. Direct labor Manufacturing overhead. Unit product cost. . P1,430.00 860.00 350.00 P2,640.00 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, P70 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. materials costing P60 per bracelet and would also require acquisition of a special tool costing P4,650 that would have no other use once the special order is completed. This order would have no effect on the company's regular sales and the order could be fulfilled using the company's existing capacity without affecting any other order. This filigree would require additional Required: What effect would accepting this order have on the company's net operating income if a special price of P3,499.50 is offered per bracelet for this order? Should the special order be accepted at this price?

Exercise 4 (Evaluating Special Order) Glamour Jewelers is considering a special order for 10 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is P3,899.50 and its unit product cost is P2,640.00 as shown below: Materials. Direct labor Manufacturing overhead. Unit product cost. . P1,430.00 860.00 350.00 P2,640.00 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, P70 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. materials costing P60 per bracelet and would also require acquisition of a special tool costing P4,650 that would have no other use once the special order is completed. This order would have no effect on the company's regular sales and the order could be fulfilled using the company's existing capacity without affecting any other order. This filigree would require additional Required: What effect would accepting this order have on the company's net operating income if a special price of P3,499.50 is offered per bracelet for this order? Should the special order be accepted at this price?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 4 (Evaluating Special Order) Glamour Jewelers is considering a special order for 10 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is P3,899.50 and its unit product cost is P2,640.00 as shown below: Materials. Direct labor.. P1,430.00 860.00 Manufacturing overhead. Unit product cost... 350.00 P2,640.00 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, P70 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing P60 per bracelet and would also require acquisition of a special tool costing P4,650 that would have no other use once the special order is completed. This order would have no effect on the company's regular sales and the order could be fulfilled using the company's existing capacity without affecting any other order. Required: What effect would accepting this order have on the company's net operating income if a special price of P3,499.50 is offered per bracelet for this order? Should the special order be accepted at this price?
Transcribed Image Text:Exercise 4 (Evaluating Special Order) Glamour Jewelers is considering a special order for 10 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is P3,899.50 and its unit product cost is P2,640.00 as shown below: Materials. Direct labor.. P1,430.00 860.00 Manufacturing overhead. Unit product cost... 350.00 P2,640.00 Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, P70 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing P60 per bracelet and would also require acquisition of a special tool costing P4,650 that would have no other use once the special order is completed. This order would have no effect on the company's regular sales and the order could be fulfilled using the company's existing capacity without affecting any other order. Required: What effect would accepting this order have on the company's net operating income if a special price of P3,499.50 is offered per bracelet for this order? Should the special order be accepted at this price?
Management is concerned about the continued losses shown by the round trampolines and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce the trampolines has no resale value. If the round trampoline model is dropped, the two line supervisors assigned to the model would be discharged. Required: 1. Should production and sale of the round trampolines be discontinued? You may assume that the company has no other use for the capacity now being used to produce the round trampolines. Show computations to support your answer. 2. Recast the above data in a format that would be more usable to management in assessing the long-run profitability of the various product lines.
Transcribed Image Text:Management is concerned about the continued losses shown by the round trampolines and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce the trampolines has no resale value. If the round trampoline model is dropped, the two line supervisors assigned to the model would be discharged. Required: 1. Should production and sale of the round trampolines be discontinued? You may assume that the company has no other use for the capacity now being used to produce the round trampolines. Show computations to support your answer. 2. Recast the above data in a format that would be more usable to management in assessing the long-run profitability of the various product lines.
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